RBS fined £56m over IT failings

 The Prudential Regulation Authority levied a fine of a further £14 million. Today’s fine is the first time the FCA and the Prudential Regulation Authority have taken joint enforcement action.

The FCA has taken this action against the Banks for failing to put in place resilient IT systems which could withstand, or minimise the risk of, IT failures.

The actual cause of the IT incident was a software compatibility problem with the underlying cause being the Banks’ failure to put in place adequate systems and controls to identify and manage their exposure to IT risks.

The IT failure affected over 6.5 million customers in the United Kingdom for several weeks.  Over the course of that period customers could not use online banking facilities to access their accounts or obtain accurate account balances from ATMs; customers were unable to make timely mortgage payments; customers were left without cash in foreign countries; the Banks applied incorrect credit and debit interest to customers’ accounts and produced inaccurate bank statements; and some organisations were unable to meet their payroll commitments or finalise their audited accounts.

Tracey McDermott, director of enforcement and financial crime at the FCA said:

"Modern banking depends on effective, reliable and resilient IT systems. The Banks' failures meant millions of customers were unable to carry out the banking transactions which keep businesses and people's everyday lives moving.

"The problems arose due to failures at many levels within the RBS Group to identify and manage the risks which can flow from disruptive IT incidents and the result was that RBS customers were left exposed to these risks. We expect all firms to focus on how they ensure that they can meet the requirements of their customers when looking at their IT strategies and policies."